Thursday, 20th June 2024LABOUR PLAN TO MAKE WORK PAY. WHAT DOES THIS MEAN?
With two weeks until the General Election and the polls favouring the Labour Party, Labour propose to ‘Make Work Pay’ and to ‘Deliver a New Deal for Working People’. But what do they intend to do and what does it mean individuals and businesses?
Labour’s manifesto sets out a number of areas in employment law that they propose to address should their lead in the polls translate to an election of a Labour government following election day on 4 July 2024. However, it is worth noting that this briefing is not exhaustive in terms of covering all of Labour’s proposals in this area.
End zero hours contracts
Labour’s view is that zero hours contracts offer “one-sided flexibility” (in favour of the business) and are exploitative. They propose to ban them (or at least those which are exploitative,) in place of a contract reflecting hours regularly worked, to offer security and predictability of hours for the individual. Such a move would reduce the flexibility according to demand that both employers and employees have previously enjoyed by working and engaging under such contracts. Employees’ costs to employers could also increase due to a more regular salary.
End ‘fire and rehire’
A controversial practice that earlier this year saw a statutory Code of Practice published for employers to follow. ‘Firing and rehiring’ is a process by which employers have sought to force through changes to employees’ terms and conditions; by terminating their employment and immediately offering a new contract on the changed terms. The Code offers protections to employees through consultation and considering alternative solutions. Labour claims the current Code to be “inadequate” and propose a strengthened version to end this practice.
Introduce a single status of worker
There are currently three different classifications of staff: employees, workers, and self-employed, with differences between each in terms of their legal status, rights and the protections they have, with employees enjoying the greater of those. Labour wants to simplify this framework to abolish employee status and have a worker status (under which those currently employees and workers would sit) and self-employed status. Labour accepts that this will require significant further consultation. It is unlikely that a ‘one size fits all’ for the new worker category, encompassing current employee rights such as holiday pay, sick pay and family leave, would be straightforward to roll out, given the flexible working regimes of those who are currently workers There are considerable questions around the taxation structure for this new classification of worker. This is one change which is potentially significant.
Unfair dismissal protection from day one
Currently an employee only acquires the basic right of protection against unfair dismissal after two years’ continuous service. This leaves employees in a somewhat vulnerable position during this time, with no recourse (in terms of unfair dismissal) against their employer if dismissed. One of Labour’s more eye-catching proposals is to remove the two-year period and give this protection against unfair dismissal from day one. This would increase the number of people with the right to bring an unfair dismissal claim (even more so with the new ‘worker’ status, above, in place). While this would place additional burdens on employers to follow fair and proper procedure when dismissing any individual, which employers have not been obliged to do for those in their first two years, it is a welcome development for individuals working as employees/workers having greater security in their role with a new employer.
Extend time limit for employment tribunal claims
Labour plans to generally overhaul and improve the employment tribunal service, but notably have said that they will increase the limitation period in which an employee may bring a claim in the employment tribunal from three to six months. The change is not so excessive that it would make defending a claim any more difficult or expensive than it currently is, and it would increase the time in which the parties can resolve a matter before recourse to the tribunal. However, it could still see an overall increase in tribunal claims being brought against employers and uncertainty hanging over employers for longer.
What do these changes mean for you?
In short, the proposals would grant more individuals greater rights, which could result in increased litigation and claims, and generally it would appear that the changes will increase costs and uncertainty for employers. However, in a positive for employers, their workforce may be strengthened by more individuals (particularly those currently self-employed) wishing to be afforded these greater worker protections and changing to worker status.
When would these changes come into effect?
Labour say that they will start to introduce legislation within 100 days of entering government, but don’t expect any of the changes to be in force by then. There is a significant amount of consultation to take place on some of their proposals. We often see employment law issues fall down the list of a government’s policy priorities and it remains to be seen how a newly formed government prioritises these matters together with their other manifesto pledges.
However, all indications are that these proposals are a fundamental part of Labour’s manifesto pledges and we can expect fairly prompt action. Furthermore, given the inclusion of these proposals in Labour’s manifesto, the House of Lords would not vote down legislation which has its roots in the manifesto (known as the Salisbury convention), which would speed up the process of passing legislation through the House.
While some of the changes could therefore be in place fairly quickly, they are worth bearing in mind at this stage and, whatever the outcome, there will be further changes to be aware of going forward.
We will release a further piece to cover the employment law proposals raised by the other major parties in this election.
If you require further information about anything covered in this briefing, please contact Michael McDonnell, William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.
This article is for general purpose and guidance only and does not constitute legal advice. It should not replace legal advice tailored to your specific circumstances.
